Medrano to serve jail time for felony embezzlement

By Tamara Steiner on January 21, 2013

It is a political implosion more worthy strife-ridden cities like Chicago and New Orleans, not sleepy little Clayton: A successful city councilman, philanthropist and local business leader now finds himself behind bars, sentenced to three years in prison for felony embezzlement.

When a San Mateo County judge sentenced former Clayton Vice Mayor Joseph Medrano on Jan. 11, Medrano’s attorney, Matt Oliveri, made a desperate, last minute bid for leniency, calling his client’s actions “a mistake…a bad decision.” He asked for probation based on Medrano’s civic activities, his family responsibilities and his lack of criminal record.

Oliveri’s plea fell on deaf ears.

Judge Jonathan Karesh was clearly fed up with what he called Medrano’s lack of remorse and failure to make any attempt at restitution. “This was not a bad decision,” he said. “It was a theft, pure and simple…a well planned scheme.” He denied probation and handed down the jail sentence.

Medrano seemed arrogant throughout the investigation and trial, an attitude that irritated the judge throughout the process, Still, when the sentence was handed down, Medrano appeared momentarily defeated and close to tears as he stood emptying his pockets. He gave a slight shrug of resignation as he was led from the courtroom in handcuffs.

Pocketed nearly $160,000

Joe Medrano’s long slow slide from civic leader and a seat on the city council to a bunk in the county jail began on Feb. 24, 2011 when the San Mateo County District Attorney filed a criminal complaint charging him with stealing $159,630 from iPass Corporation, a Redwood Shores company.

Medrano was iPass’ insurance broker until June 2009. He placed millions of dollars in Directors and Officers Liability (D&O) and Workers Compensation insurance for the company.

In June of 2009, the company’s D&O policy was up for renewal. At the same time, senior management was undergoing a change and Medrano’s renewal proposal came under scrutiny. Finding irregularities in Medrano’s work, iPass fired him and placed the D&O coverage with another broker.

The loss of the D&O insurance cost Medrano thousands of dollars in commissions at a time when he could ill afford it,documents showed. During the trial, the prosecutor produced bank statements that showed his trust account as much as $57,000 overdrawn.

But at the time iPass fired Medrano, its Workers Compensation policy was already in place through Medrano’s company and they were sending their premium payments to his office. In June of 2009, he had already received their third quarter premium of $79,815 and put it in his own bank account. In July, they sent him their fourth quarter premium check for another $79,815, which Medrano also banked, never sending either payment to Travelers Insurance, iPass’s carrier. This left iPass without Workers Compensation coverage. When iPass discovered the theft, Travelers covered the iPass loss and sued Medrano in civil court. He never answered the suit and Travelers won a judgment by default.

End of an era

The Clayton Pioneer first learned of the charges against Medrano in August 2010, when the newspaper received a copy of the criminal complaint. When contacted about the complaint, Medrano said it was a simple “breach of contract matter…a civil case” and insisted the charges would be dismissed at the preliminary hearing and it would never go to court.

However, he was wrong. In October of 2012, after months of procedural dodging and judicial shadowboxing, Medrano was tried and convicted for felony embezzlement with the enhancement of “excessive taking.” The trial lasted eight days and the evidence was overwhelming. The jury returned the guilty verdict on Oct. 11 after deliberating just a little over two hours.

Medrano will serve 18 months in jail, with the remaining time to be spent on probation. His insurance license was revoked by the Department of Insurance and he is prohibited from working in any fiduciary capacity. As for his community activities, he resigned from the city council after his conviction, effectively ending his political career, since he can never again hold public office.